How To Convert Your Savings Into A Pay Check After Retirement
If you’re ready to retire, you’re probably taking a good, hard look at your retirement fund and other income such as social security. In many cases, you’re looking at a fraction of what you were making while working. While it may be enough to get by on, it might not give you much extra money each month. One thing you can do is convert your savings into a pay check if you’ve built up a nice nest egg over the years.
Evaluate your Income and Expenses
The first thing to do is figure out what you’ll actually be making in retirement and what you’ll be spending. Then compare this to what you’d like to be making. The difference is what your “paycheck” from your savings will be. Once you have that amount, you can divide the amount in your savings by it to see how long your savings can last. If you don’t need a lot of extra money each month or if your savings account is fairly large, you may be able to live comfortably for years.
Plan for Emergencies
One of the problems some people encounter is that their savings is depleted faster than they expected. Instead of living off of it, they spent much of it on an expensive vacation or a new home. However, sometimes people have to dip into their savings more than they planned due to unexpected expenses. For the retired, unexpected medical bills are often a problem. Other issues include major home repairs or the need to buy a new vehicle. Remember to plan for these emergencies when looking at your finances. One good rule is to subtract ten percent of your savings right away before calculating your monthly savings paycheck so you have some extra.
Also Plan for Extra Expenses
While you shouldn’t spend a large amount of your savings, there may be times when you want to spend a little more. For example, you might need more money around the holiday season to purchase gifts for your family. It’s okay to occasionally take more from your savings than usual, but again, make certain you’re not doing it too often and that you take into account how it will impact your finances.
Consult a Financial Planner
Retirement financial planning is a great option for those who may need a little more money than they thought. A financial planner can help you look at options like investments or buying bonds to help generate extra money. Some of these options are riskier than others, of course. You could invest in stock only to lose money. Others are a sure thing but won’t generate extra money right away, such as buying bonds that have to mature before they pay out. Your planner can help you decide the best option for converting your savings into a pay check, if you can’t live off what you have now.
Avoid Credit Cards
If you’ve burnt through your savings, you may be tempted to get a credit card. However, this is the last thing you want to do. If you don’t plan on making any more major purchases in life, you might not see any reason to protect your credit. However, no one can predict the future. If you do find yourself needing extra funds after you retire, look into a personal loan or speak to a retirement financial planning expert. They can help you find better options than using credit cards.
Don’t Forget to Check Your Credit
If you’re not using credit cards or making any large purchases, you may not do regular credit monitoring. However, remember that identity thieves can apply for loans or credit cards in your name if they steal your personal information. It’s still important to protect your credit after you retire, so continue to get regular credit monitoring reports.
Amy Johnson is an active blogger who is fond of sharing interesting finance related articles to encourage people to manage and protect their finances.
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